10 July 2014

RHB Research positive on Titijaya prospects

RHBResearch Institute said Titijaya Land continued to thrive after its listing in November.

It said the property developer’s earnings were expected to be underpinned by its pipeline launches of about RM6.7bil in hotspots such as Shah Alam, KL Sentral and Penang.

Its higher-than-average gross margins of about 35%-40% versus the industry average of 20%-30% would also help buoy growth, said RHB.

The stock could be valued at between RM3.24-RM3.47, based on a 25%-30% discount to its realisable net asset value, according to the brokerage.

RHB Research said Titijaya had a well entrenched position in the Klang and Subang enclaves and had been proactive in expanding its landbank, typically acquiring land at below market prices.

Since listing last year, it said Titijaya had acquired land parcels measuring 4.6 acres in KL Sentral and 20.4 acres in Batu Maung, Penang.

RHB said Titijaya was guiding for a sizeable GDV of RM2bil for the Batu Maung site.

“We believe this project could garner a favourable response given its proximity to the second Penang bridge and possible spillover effects from catalytic investments in Seberang Prai,” it said.

The research outfit explained that Titijaya would likely maintain its gross margins of 35%-40% despite the rising cost environment, which would be exacerbated by the goods and services tax in April 2015, because of its strategy of procuring land at low costs.

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